Correlation Between Necessity Retail and SiriusPoint

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Can any of the company-specific risk be diversified away by investing in both Necessity Retail and SiriusPoint at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Necessity Retail and SiriusPoint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Necessity Retail REIT and SiriusPoint, you can compare the effects of market volatilities on Necessity Retail and SiriusPoint and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Necessity Retail with a short position of SiriusPoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Necessity Retail and SiriusPoint.

Diversification Opportunities for Necessity Retail and SiriusPoint

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Necessity and SiriusPoint is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Necessity Retail REIT and SiriusPoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiriusPoint and Necessity Retail is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Necessity Retail REIT are associated (or correlated) with SiriusPoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiriusPoint has no effect on the direction of Necessity Retail i.e., Necessity Retail and SiriusPoint go up and down completely randomly.

Pair Corralation between Necessity Retail and SiriusPoint

If you would invest  2,535  in SiriusPoint on October 26, 2024 and sell it today you would earn a total of  24.00  from holding SiriusPoint or generate 0.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy2.56%
ValuesDaily Returns

Necessity Retail REIT  vs.  SiriusPoint

 Performance 
       Timeline  
Necessity Retail REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Necessity Retail REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Necessity Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
SiriusPoint 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SiriusPoint are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, SiriusPoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Necessity Retail and SiriusPoint Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Necessity Retail and SiriusPoint

The main advantage of trading using opposite Necessity Retail and SiriusPoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Necessity Retail position performs unexpectedly, SiriusPoint can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SiriusPoint will offset losses from the drop in SiriusPoint's long position.
The idea behind Necessity Retail REIT and SiriusPoint pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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